Fed Chair Alan Greenspan: We are in uncharted territory

Alan Greenspan: Tightest labor market I’ve ever seen

Greenspan: Jay Powell is extremely competent

Greenspan: We have to deal with entitlements

Greenspan: The financial community doesn’t care about bookkeeping, they’re going to confront inflation

All references must be sourced to CNBC.

GREENSPAN ON THE FED

GREENSPAN: EVERY PRESIDENT HAS AN INSIGHT INTO HOW THE MARKETS WORK AND WHERE INTEREST RATES OUGHT TO BE, WHICH IS ALWAYS SUPERIOR TO THAT OF THE FEDERAL OPEN MARKET COMMITTEE.

KERNEN: SO THEY THINK.

GREENSPAN: I MEAN THE BEST THING YOU CAN DO IF YOU ARE IN THE FED IS PUT EARMUFFS ON AND JUST DON’T LISTEN.

GREENSPAN ON ENTITLEMENTS

IS IT ENTITLEMENTS, WHICH ARE GOVERNMENT AUTHORIZED, OR IS IT THE MARKET ADJUSTING? AND ALL OF THE EVIDENCE SUGGESTS THAT ENTITLEMENTS ARE EMBODIED IN THE OUTLOOK AND THEY WILL NEVER CHANGE THEIR PATTERN. THEY ARE MANDATED BY LAW. THEREFORE, ALL OF THE IMPACT IS ON THE REDUCTION. AS ENTITLEMENTS GO UP, GROSS DOMESTIC SAVINGS GOES DOWN AS A PERCENT OF GDP.

GREENSPAN ON SINGLE ENTRY

THEY ARE ALL INVOLVED IN SINGLE ENTRY BOOKKEEPING. THEY DON’T LIKE TO DO JUST THE DEBIT SIDE, THEY JUST WANT THE CREDIT SIDE. AND THE WORLD IS DOUBLE ENTRY. IF WE WANT TO GET OURSELVES INTO REAL SERIOUS TROUBLE, DON’T ATTACK THIS PROBLEM. I’M TELLING YOU SWEDEN SOLVED IT. THE SOLUTION IS NOT ECONOMIC, IT IS POLITICAL. AND THE QUESTION IS DO WE HAVE THE GUTS TO DO WHAT THE SWEDS DID.

GREENSPAN ON A SOLUTION

ALL YOU HAVE TO DO IS GET THE FINANCING SYSTEM THAT CREATES THE REVENUES THAT THE ENTITLEMENTS CREATE AND TO BE SURE AS THE POPULATION AGES, WE ARE GOING TO BUILD UP EVER INCREASING ENTITLEMENT LEVELS. AND AS FAR AS I CAN SEE, EVERYONE IS BLINDING THEMSELVES TO THAT FACT…NOBODY IS LISTENING. THE REASON THEY DON’T LISTEN IS THAT THE FINANCIAL COMMUNITY DOESN’T CARE ABOUT BOOKKEEPING. WHAT THEY CARE ABOUT, WHICH IS WHAT THEY ARE GOING TO CONFRONT, IS INFLATION.

Author: Jacob WolinskyJacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and three kids in Passaic NJ. -
Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own 2.5 grams of Gold